Why Buy Mobile Homes?

Posted by Nick Niesen on November 8th, 2010

You can buy mobile homes for much less than stick-built houses in most areas of the country. Despite the common predjudice against them, mobile homes are the cheap housing choice of millions. While the advantages are not always obvious, they are real.

One of the advantages is fast equity buiding. You see, the myth about mobile homes depreciating is only half true. In parks they generally go down in value over time. Buy mobile homes on land, though, and they'll usually go up in value.

Buy Mobile Homes With Real Estate

My first home was a mobile, and it doubled in value in the twelve years I lived in it. The home deteriorated a little (don't all houses?), but the value of the land rose. With a lower price than a "stick-built house, the mortgage payments were lower. Because of the shortened amortization (seven years), and lower loan amount, I built equity fast.

Buy Mobile Homes To Build Equity Fast

A house with a $100,000, 6%, 30-year mortgage loan gives you a payment of $599.60. $500 of the frst payment will go to interest, $99.60 to principal. You built equity of $99.60 (I'm ignoring appreciation for the moment).

A mobile home on land, with a $30,000, 8%, 10-year mortgage gives you a payment of $363.99. The higher interest rate is normal with mobiles. The shorter term is normal too, so you'll own the home free-and-clear in 10 years instead of 30. The first month, $200 will go to interest, meaning $163.99 goes to principal. You built more equity in this scenario.

A mobile home on land might appreciate more slowly than a "regular" house, but faster loan pay-down probably may cover this factor. Now, if you also chose to bank the difference in payments ($235.61 per month), you'd definitely be better off financially with the mobile home versus the more expensive home (Except during times of fast appreciation).

You can pay less per month and build more equity. Your real estate agent won't tell you this, and don't expect him to agree even after you explain it. Math skills aren't part of the licensing requirements (at least they weren't when I sold real estate).

Other Advantages

You can do what you like with the home when you own the land. I rented rooms in my home, and took in more money than it originally cost.

Mobiles are cheap to maintain. I once had a furnace die in a mobile home I owned as a rental.This is about the most expensive repair you'll have in a mobile. I replaced it for $1,200, which is much less than a furnace for a larger home. For $200 you can tar the roof, or $30 if you do it yourself, instead of $5,000 to re-shingle a traditional roof. Windows, plumbing, and doors are all cheaper.

Property taxes, because they're based on value, cost less. Insurance is less because you're insuring less value. Just be sure you can get insurance before you buy. Some old mobiles may be uninsurable in some areas.

I wouldn't buy a mobile home if house prices for houses are just as low in the area. We bought a house near Butte, Montana for $17,500 - less than mobile homes for sale there (See a photo on our site).

Will your own needs and predjudices let you be comfortable in a mobile home? It's something to consider. They may be in areas you don't want to live (true of houses as well). These are personal things you have to consider.

Why buy mobile homes? The advantages are clear for young people starting out, who may have no other options. It may also be your better option, when you consider the lower price, the simpler, cheaper maintainance, lower monthly payments, low property taxes, lower insurance costs, and faster equity build-up. Why not buy mobile homes?

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Nick Niesen

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Nick Niesen
Joined: April 29th, 2015
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